Appellate Tribunal overturns penalty for income concealment post-search

The Appellate Tribunal set aside the penalty imposed under section 271(1)(c) on the assessee for alleged concealment and furnishing of inaccurate particulars of income related to on-money receipts declared post a search. The Tribunal ruled in favor of the assessee, noting that the on-money receipts were disclosed in the return filed after the search and accepted during assessment, thus not warranting a penalty. The decision was based on the High Court's interpretation that no penalty is leviable if no addition is made post a search in the return. The penalty was ultimately deleted, and the assessee's appeal was allowed.

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Issues:
Penalty under section 271(1)(c) for alleged concealment and furnishing of inaccurate particulars of income based on on-money receipts declared post search.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad arose from the CIT(A)-XII, Ahmedabad's order confirming a penalty of Rs. 77,25,000 imposed on the assessee under section 271(1)(c) of the Income Tax Act. The case revolved around the assessee company, engaged in building and developing housing projects, and its declaration of on-money receipts following a 'search' conducted in the case of its partner. The Assessing Officer initiated penalty proceedings against the assessee, alleging concealment and furnishing of inaccurate particulars of income regarding the on-money receipts.

The Assessing Officer, in the penalty order, held that the assessee's declaration of on-money receipts was not covered by the explanation 5 immunity under section 271(1)(c), as it did not quantify the receipts separately and amounted to concealment and furnishing of inaccurate particulars of income. The CIT(A) upheld this penalty decision, leading to the appeal by the assessee.

During the proceedings, it was established that the 'search' took place within the relevant accounting period, and the assessee's return, including the on-money receipts, was filed after the search but accepted in the assessment. Citing a recent decision of the jurisdictional High Court, it was noted that if no addition is made post a search in the return, it should be treated as filed under section 139, and no penalty is leviable. The Tribunal observed that the deeming fiction of concealment did not apply in this case, as the assessee had admitted the on-money receipts as income in the return. Relying on the High Court's view, the Tribunal deleted the penalty, stating that the assessee's arguments on merits were successful.

Ultimately, the Appellate Tribunal allowed the assessee's appeal, setting aside the penalty imposed under section 271(1)(c). The judgment was pronounced on 09-06-2015 by the Tribunal.

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